I've reached a point where I've decided that I really need to do something about my overwhelming debt load. I've been struggling for the past year to make things work, but my creditors have cut my limits to just above my balances and have all jacked up the interest rates to maximum levels (most at 29.99%). I currently owe around $37000.00 on credit cards, and drain my checking account each month making payments and covering my necessities. I'm current on all of my bills, but have nothing left for savings or emergencies, which is scary.
My problems started with a reduction in income that I thought would be temporary, but turned permanent. Instead of making cuts immediately when my income level dropped, I supplemented my income via credit (very stupid idea on my part) and things just snowballed from there when my income never returned to it's former level. Now even though I have a decent paying job ($46K/ year) I live like I did when I was a poor college student, eating ramen noodles, no new clothes during the past year, etc. (cue the tiny violin). I know I put myself in this place, but it's time to fix the situation.
Anyway, I've visited the NOLO website and took the means test for chapter 7. I'm above median for my area (Wisconsin) by a bit (+3494.00), but with my mortgage payment I come close to passing, but just not quite…I fail by about $10 month…which is kind of frustrating.
The one area on the test where I see that I could change this is through the vehicle ownership (line 23) expense. Currently, it is set to "0" as I own my car outright with no lien. If I understand correctly, the recent Ranson supreme court ruling states that I can't claim that expense because I don't have a current loan. However, if I was able to obtain an auto loan it would seem like I would then easily qualify for a chapter 7.
My currently vehicle is a reliable car (2004 Toyota Matrix), no problems, and probably worth about $6000. I had planned on keeping it until the wheels fell off, but that may not be in my best interest. I'm going over the scenarios in my head, but it would seem like I could try to use my car as a trade-in, or sell it to come up with downpayment money for another vehicle that would carry a loan. My concern is that my utilization is really high on my credit cards and that I won't be approved for a loan, although I do still have decent scores (low 700s). I'm envisioning a nightmare where I have to trade in my new car for a less reliable one at a "buy here, pay here" type of place in order to pass the means test. I guess in the short-term that might still be the best route instead of spending the next 5 years in a repayment plan.
I guess I'm just looking for some feedback here from this very helpful group.
My problems started with a reduction in income that I thought would be temporary, but turned permanent. Instead of making cuts immediately when my income level dropped, I supplemented my income via credit (very stupid idea on my part) and things just snowballed from there when my income never returned to it's former level. Now even though I have a decent paying job ($46K/ year) I live like I did when I was a poor college student, eating ramen noodles, no new clothes during the past year, etc. (cue the tiny violin). I know I put myself in this place, but it's time to fix the situation.
Anyway, I've visited the NOLO website and took the means test for chapter 7. I'm above median for my area (Wisconsin) by a bit (+3494.00), but with my mortgage payment I come close to passing, but just not quite…I fail by about $10 month…which is kind of frustrating.
The one area on the test where I see that I could change this is through the vehicle ownership (line 23) expense. Currently, it is set to "0" as I own my car outright with no lien. If I understand correctly, the recent Ranson supreme court ruling states that I can't claim that expense because I don't have a current loan. However, if I was able to obtain an auto loan it would seem like I would then easily qualify for a chapter 7.
My currently vehicle is a reliable car (2004 Toyota Matrix), no problems, and probably worth about $6000. I had planned on keeping it until the wheels fell off, but that may not be in my best interest. I'm going over the scenarios in my head, but it would seem like I could try to use my car as a trade-in, or sell it to come up with downpayment money for another vehicle that would carry a loan. My concern is that my utilization is really high on my credit cards and that I won't be approved for a loan, although I do still have decent scores (low 700s). I'm envisioning a nightmare where I have to trade in my new car for a less reliable one at a "buy here, pay here" type of place in order to pass the means test. I guess in the short-term that might still be the best route instead of spending the next 5 years in a repayment plan.
I guess I'm just looking for some feedback here from this very helpful group.
Good luck!! Maybe someone could chime in on how far ahead of her filing date she would need to do this or if it matters.
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